Formation?

 OFFER & ACCEPTANCE à offer, com, accept, com

CERTAINTY OF TERMS à no vague or future

INTENTION TO CREATE LEGAL RELATIONS à no intimates

CONSIDERATION à valuable, exchange, fresh

SPECIFIC CASES:

UNILATERAL CONTRACT

TENDERS

Defects?

MISREPRESENTATION à operative or term

PROTECTION OF WEAKER PARTIES à duress, undue influence, unconscionability

SPECIFIC CASES:

PRIVITY

Terms?

EXPRESS TERMS & IMPLIED-IN-FACT

BREACH

Modification?

FRESH CONSIDERATION à practical benefits

ESTOPPEL

Remedies?

EXCLUSION/LIMITED LIABILITY CLAUSE

DAMAGES à money/equitable, expectation, liquidation

LIMITATIONS à causation, remoteness, mitigation

Formation?

OFFERS AND INVITATION TO TREAT   GENERAL DOCTRINE An offer is an expression, by words or conduct, of a willingness to be legally bound on certain terms upon acceptance by the offeree. This is distinguished from an invitation to negotiate, discuss, or a mere quotation of price. (Canadian Dyers v Burton)   TEST Examine the language and conduct used in light of the circumstances in which they are used. (Canadian Dyers v Burton)

COMMUNICATION OF OFFER GENERAL DOCTRINE: To be effective, the offer must be communicated to the offeree (Blair v. Western Mutual Benefit Assn.)   CASE SPECIFIC Knowledge of the offer is a precondition to acceptance (Williams v. Carwardine; R. v. Clarke)Two cross-offers do not make a contract (Tinn v Hoffman & Co.) REVOCATION OF OFFER GENERAL DOCTRINE: Offer is open to revocation until acceptance is communicated. Revocation of an offer by the offeror will only be effective if the intention to revoke (even by a reliable third party) is communicated to the offeree (Dickinson v. Dodds)   CASE SPECIFIC An offeror may revoke an offer prior to acceptance even where it has promised to keep the offer open for a given time. (Dickinson v. Dodds)EXCEPTION An option contract supported by consideration moving from the offeree may limit the revocability of an offer by the offeror (Mountford v. Scott; Politzer v. Metropolitan Homes Ltd.)A posted revocation is only effective on receipt by the offeree. (Byrne v. Van Tienhoven)

ACCEPTANCE GENERAL DOCTRINE To exercise power of acceptance, offeree must communicate an unequivocal assent to the terms of the agreement that has been offered. (Livingstone v. Evans; Carlill v. Carbolic Smoke Ball)   TEST Whether there has been an acceptance is a matter of the construction of the language and conduct of the offeree in her circumstances. (Livingstone v. Evans) Mirror image rule: The terms of the acceptance must correspond with the terms of the offer. (Livingstone v. Evans; R v. Clarke)   EXCEPTION A rejection of an offer terminates the offer. (Livingstone v. Evans; Hyde v. Wrench)   The making of a counter-offer is a rejection of the original offer. (Livingstone v. Evans; Hyde v. Wrench) A counter-offer is distinguished from a mere inquiry as to whether the offeror will modify its terms. (Livingstone v. Evans; Stevenson, Jacques & Co. v. McLean)

COMMUNICATION OF ACCEPTANCE GENERAL DOCTRINE: For an acceptance to be effective, it must be communicated by the offeree to the offeror, (Livingstone v. Evans; Carlill v. Carbolic Smoke Ball)   An acceptance must be in the manner prescribed by the offer, and an offer may invite acceptance by conduct and may also set limitations on the kind of conduct that constitutes acceptance (Carlill v. Carbolic Smoke Ball; Eliason v. Henshaw; ProCD v. Zeidenberg).   CASE SPECIFIC POSTAL RULE: If acceptance by post is permitted, then acceptance is made when and where the acceptance is posted. (Household Fire & Carriage Accident Insurance Co. v. Grant.)EXCEPTION: the express terms of offer may specify that acceptance will only be effective when it reaches the offeror OR where the postal acceptance rule would lead to manifest inconvenience and absurdity (Holwell Securities v. Hughes)When instantaneous modes of communication are used, acceptance is made when and where the acceptance is communicated to the offeror. (Brinkibon Ltd. v. Stahag Stahl mbH)TEST factors:  more likely to be receipt rulei) the more instantaneous is the modeii) the more the message remains under the control of the senderiii) the more easily the sender can confirm receiptFor modes of communication that are not instantaneous, what constitutes communication of the acceptance may vary based on the intention of the parties, sound business practice, and an assessment of where risks lie. (Brinkibon Ltd. v. Stahag Stahl mbH) ACCEPTANCE WITHIN REASONABLE TIME GENERAL DOCTRINE : An offer lapses after a time expressly fixed by the offer. (Barrick v. Clark)   CASE SPECIFIC If no time is stipulated, an offer lapses after a reasonable period of time. (Barrick v. Clark) TEST: The length of the reasonable period of time “depends upon the nature and character and the normal or usual course of business in negotiations leading to a sale, as well as the circumstances of their offer including the conduct of the parties in the course of negotiations.” (Barrick v. Clark) SILENCE AS ACCEPTANCE GENERAL DOCTRINE: Silence does not generally constitute an acceptance. (Felthouse v. Bindley) While an offer can prescribe the form or time for acceptance, an offeror cannot impose a contract on an offeree by requiring the offeree to act. (Felthouse v. Bindley)   EXCEPTIONS: However, silence or inaction may constitute an acceptance where given the circumstances such silence would be understood by a reasonable offeror to constitute acceptance. (Saint John Tug Boat Co. v. Irving Refinery Ltd.) TEST Objective assessment of intention by looking at the conduct and circumstances to infer if they reasonably signaled assent to be bound to the terms of the contract. (Felthouse v. Bindley – Ritchie J.) BATTLE OF THE FORMS GENERAL DOCTRINE: Traditional rule is that the last shot prevails – the last form sent and received without objection followed by an act or performance is enforceable acceptance. Consistent with mirror image rule. (Butler Machine Tool v. Ex-Cell-O Corp.)   EXCEPTION: but the terms may also be the “first blow” or depend on the forms sent by both sides (Tywood Industries v. St Anne-Nackawic Pulp & Paper Co.) TEST: was there acknowledgement of the supremacy of some set of terms or consistent and continual insistence on particular termswas there notice of any changed termswas there any objection to any changed termshow material were the changed terms

UNILATERAL CONTRACT

GENERAL DOCTRINE: An offer of a unilateral contract is accepted by performance by the offeree of its contractual obligations. (Carlill v. Carbolic Smoke Ball)An offer for a unilateral contract may not be revoked while the offeree has unequivocally commenced performance (Errington v. Errington and Woods)Knowledge of the unilateral contract is required (R v Clark)

TENDERS

GENERAL DOCTRINE: Traditional view was that tender was just an invitation to treat. Ron Engineering changed that. Held that tender call, coupled with submission of a bid created a binding contract CONTRACT A, which was different from the actual construction contract, CONTRACT B. Thus provisions of the tender call establishing the irrevocability of bids and the forfeiture of deposits of bidders who, when selected, refused to proceed, were contractually binding on bidders including the P.   EXCEPTION: “whether or not Contract A arises depends on whether the parties intended to initiate contractual relations by the submission of a bid in response to an invitation to tender”; (M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd.) TEST: Factors: a) express words b) how formal a bidding process c) how onerous on bidders: how detailed bids must be; how expensive or difficult to prepare (e.g. assembling a team of subcontractors); whether there are any additional obligations on the bidders, e.g. (i) provide a tender deposit or bid security; (ii) not to withdraw bid (as in Ron Engineering) d) whether process provides any room to negotiate between the bidders and the owner

CERTAINTY OF TERMS   GENERAL DOCTRINE No contract is formed if an agreement lacks certainty with respect to the material terms of the contract. (May and Butcher Ltd. v. R.)   EXCEPTION Where a term exists but is vague or where an agreement is silent or incomplete as to a material term, the courts try to find a meaning for the term, so long as the parties intended to create a contract. (R v CAE Industries Ltd)   TEST: In giving content to an uncertain term, the court will use an objective approach that seeks a reasonable construction of factors such as: a) language of the relevant contractual provision b) context of other parts of the contract c) reference by the parties to an external standard, e.g. “market price” d) conduct of the parties under the contract (e.g. part performance) e) beyond this contract, existing course of dealings or relations of the parties (e.g. earlier practice of the seller) f) normal practice or custom in a shared trade or industry g) statutory law (e.g. Sale of Goods Act) h) machinery for third party determination; e.g. external valuation or arbitration i) standard of reasonableness   CASE SPECIFIC Agreements to agree: Where the parties expressly agree to leave a material term for future agreement, the courts may refuse to find that any contract is formed.  (May and Butcher Ltd. v. R.) TEST whether there is only an agreement to agree is a matter of intent as determined by the language and conduct of the parties; where there is conduct evidencing that the parties had agreed to something more definite, then the courts may use that conduct to determine the term. (Foley v. Classique Coaches Ltd.)   Agreement to Negotiate: An agreement to negotiate a material term is generally not certain enough to form a contract.  Mannpar Enterprises Ltd. v. Canada EXCEPTION: however, the courts may find that there is a contract with an obligation to negotiate in good faith, especially where more is agreed to such as (ii) in the negotiation of a renewal of a contract or of a related contract, a promise to negotiate combined with some kind of objective benchmark in negotiations; Empress Towers v. Bank of Nova Scotia; (ii) an express promise to negotiate in good faith; Molson Canada 2005 v. Miller Brewing Co.

INTENTION TO CREATE LEGAL RELATIONS GENERAL DOCTRINE: Certain categories of social relationship where parties are presumed not to intend legal relations, absent evidence to the contrary E.g. family, friends, colleagues (Balfour v. Balfour)   TEST: Objective standard of finding intention reflects court’s decision as to whether a reasonable person in the position of promisee would consider that the promisor “intended” to make a promise that would affect the promisor’s legal status.   CASE SPECIFIC There may be no contract formed where the parties have expressly provided that the parties’ intention is not to create legally enforceable contractual relationship e.g. Rose and Frank Co. v. J.R. Crompton and Bros:  an otherwise legally enforceable commercial distribution agreement that included the express clausee.g.  Letters of Comfort provided in business contexts are usually not treated as intended to create legal relations; Toronto Dominion Bank v. Leigh Instruments Ltd.

CONSIDERATION GENERAL DOCTRINE Consideration is necessary for the enforcement of contractual promises, unless the contract is made in the form of a deed. (Dalhousie College v. Boutlier; Thomas v. Thomas)   Consideration provided must be in exchange for the other party’s act, forbearance or promise. (Brantford General Hospital Foundation v. Marquis Estate) e.g. Mrs Marquis never requested promise to name the wing in exchange for her promised donation TEST Was the consideration requested or bargained for by the other party? reliance, even detrimental reliance, on a promise is not itself consideration for the promise, unless the reliance was undertaken in exchange for the promise of the promisor (Dalhousie College v. Boutilier)Consideration must move from the promisee.  (Thomas v Thomas; Dalhousie College v. Boutilier)   Consideration must have some value in the eye of the law. (Thomas v. Thomas) Mutual promises: A promise to act or forbearmost common form of consideration in executory contracts: the mutual exchange of promisesonly promises which have been given or made as part of a bargain or exchange are enforceable Consideration need not be adequate or equivalent or fair to be sufficient consideration.    CASE SPECIFIC Moral obligation is not good consideration. (Eastwood v. Kenyon; Thomas v. Thomas) GRATUITOUS PROMISE:  not enforceable as a contractual promise (Dalhousie College v. Boutilier; Brantford General Hospital Foundation v. Marquis Estate; Dickinson v. Dodds) o              even when the promise is clearly and expressly made o              a nudum pactum or bare promise is unenforceable   SEAL: A promise given under seal will be binding even without consideration. (Kiska) Also, common to have bearing a wafer or other indication of seal (signature is prudent, but not required).   FOREBEARANCE GENERAL DOCTRINE Consideration may consist of an act or forbearance, or the promise thereof, undertaken in exchange for the other party’s act, forbearance or promise. E.g, “consideration may consist either in some right, interest, profit or benefit accruing to the one party, or some forbearance, detriment, loss, or responsibility, given, suffered, or undertaken by the other.” (Currie v. Misa)   CASE SPECIFIC Act: e.g. buying a smoke ball and using it (Carlill), proving information on murders (Williams), or paying 100 for the option to church (Politzer) A forbearance of something otherwise legally entitled to do. e.g. refrain from drinking (Hamer v Sidway)A forbearance to sue on a legal claim can be good consideration (B. (D.C.) v. Arkin)Must have bona fide belief in claim AND would actually go through with it PAST CONSIDERATION   GENERAL DOCTRINE: Past consideration is not good consideration: an act done before a promise was made is generally not consideration for the promise. (Eastwood v. Kenyon)   EXCEPTION Promises to compensate for past performance may be enforceable if: (Lampleigh v. Brathwait; Pao On v. Lau Yiu Long) i)              performance was done at the request of the promisor;   ii)             it was understood at the time of the service that there would be payment or conferment of some other benefit; and iii)            the payment or conferment of benefit would have been legally enforceable if promised in advance. (NO DURESS)   GOOD FAITH Bhasin v. Hrynew: the defendant company actively misled the plaintiff, one of its dealers, in the course of performance of its obligations Narrower duty being decided in this case: duty of good faith performance – good faith here defined narrowly as a duty of honest performance: parties must be honest with each other in the performance of their contractual performance – not an implied in fact term and not an implied in law term, rather “a general doctrine of contract law that imposes as a contractual duty a minimum standard of honest contractual performance.” [B&P 470]

Defects?

MISREPRESENTATION   OPERATIVE MISREPRESENTATION GENERAL DOCTRINE One party has induced another to enter into an agreement by making a material statement of fact that is false. Elements of Operative Misrepresentation: (Redgrave v. Hurd) 1) Representation of Fact TEST: distinguish representations from “puffery” and salesmanship; distinguish from statements of opinion; non-disclosure is generally not a representation of fact (caveat emptor) 2) Representation is False 3) Representation was Material: the statement must have been important enough to induce a reasonable person in the circumstances of the innocent party to enter the contract 4) Representation was Acted Upon by Innocent Party:  the innocent party must have actually been induced to enter the contract because of the representation (5) due diligence   MISREPRESENTATION AS A BREACH OF TERMS GENERAL DOCTRINE (1) a false representation of fact (2) intention of the parties to make the representation a contractual term TEST TRADITIONAL TEST:  Evidence of intention that the statement was to be included as a term of a contract and that contractual liability should attach to a false statement. MODERN TEST:  less emphasis on evidence of express intent and greater willingness to infer intention from the circumstances based on an assessment of the words, conduct and circumstances, including the relative knowledge, of the parties (Dick Bentley Productions Ltd. v. Harold Smith (Motors) Ltd.) Examples of factors to consider: “totality of the evidence”” – Relative state of knowledge of the parties e.g. one party in special position to know the truth of representation because of past knowledge or expertise -Ability of innocent party to verify statements -Evidence of importance of the statement to one or both parties -Time at which the statement was made -Whether a later written document was produced which excluded the term

PROTECTION OF WEAKER PARTIES To make a contract, one needs (1) PARTIES WITH CAPACITY, (2) MANIFESTED ASSENT, (3) CONSIDERATION Defenses to a contract – FRAUD, DURESS, MISTAKE, IMPOSSIBILITY OR ILLEGALITY   GENERAL DOCTRINE For promises to be binding, they should arise out of autonomous consent of the parties and reflect baseline conditions of voluntariness and information.   REMEDIES DURESS: agreement is rendered VOIDABLE/unenforceable. But also provides basis for restitutionary recovery of benefits conferred in absence of formation of agreement.   UNDUE INFLUENCE: REQUIREMENT OF RESTORATION OF THE STATUS QUO ANTE – GIVING BACK AND TAKING BACK ON BOTH SIDES In some cases courts have opted to provide monetary compensation where status quo restoration is not possible. When granting equitable rescissionary relief, courts have direction to devise an order that seeks to restore the parties “substantially” to status quo (monetary awards possible eg Rick v Brandesema) DURESS  GENERAL DOCTRINE Traditional: a) actual or threatened physical harm to person (“duress to the person”) b) improper refusal to release goods or wrongfully seize goods (“duress of goods”)   Modern: includes broader range of acts that create unlawful or illegitimate pressure (Pao On v. Lau Yiu Long; Universe Tankships v. International Transport Workers’ Federation; Greater Fredericton Airport Authority v. Nav Canada) TEST i) availability of practical alternatives for the party under duress ii) any benefits received by the party under duress iii) fact or absence of protest by the party under duress iv) whether and how quickly the party subsequently disavowed v) whether party under duress had independent advice   CASE SPECIFIC: One party is forced to make an agreement with another due to threat to their person, goods, or fear of economic loss (usually breach of contract). (Greater Fredericton Airport Authority v. Nav Canada) UNDUE INFLUENCE GENERAL DOCTRINE “the unconscientious use by one person of power possessed by him over another in order to induce the other to enter a contract” (Brooks v. Alter)   There is a presumption of undue influence where there are certain relationships between parties in which one party is in position to dominate the will of the other through influence over the other (Geffen v. Goodman Estate) TEST i) relationships with potential for domination: relations of trust, confidence, and influence, “where potential for domination of the will of the other” ii) may need to show manifest disadvantage concern: many relationships of trust and confidence may involve only weak actual influence (e.g. bank-client; spouses)   Rebuttal of presumption: show that exercise of independent will (Geffen v Goodman Estate) (i) full information and understanding of the transaction (ii) independent advice (iii) limited magnitude of disadvantage   UNCONSCIONABILITY GENERAL DOCTRINE Unfair agreement resulting from inequality of bargaining power between strangers or people with existing relationship. 1) process(procedurally): undue exertion of substantial inequality of bargaining power; not just unequal power, but substantial difference in power (Marshall v. Can. Permanent Trust Co) 2) substance: resulting in a substantially unfair or improvident bargain (Harry v. Kreutziger)   TEST (Heller vs Uber Technologies) i) a grossly unfair and improvident transaction ii) a lack of independent legal advice or suitable advice iii) an overwhelming imbalance of bargaining power caused by victim’s ignorance of business, illiteracy, ignorance of the language of the bargain, blindness, deafness, illness, senility or similar disability; and iv) the other party’s knowingly taking advantage of this vulnerability   CASE SPECIFIC REMEDY FOR UNCONSCIONABILITY: recession of agreement in equity à status quo ante. Where equitable rescission isn’t possible there is precedent for monetary compensation for true value of the benefit conferred on stronger party.   INCAPACITY GENERAL DOCTRINE Mental Incompetence: the legally incompetent as well as persons who are incapable of appreciating the nature and effects of what they are doing TEST voidable at the option of the party lacking the competence at the time of making the contractfurther requirement:  the other party had knowledge of the incompetence: (Hart v. O’Connor)

PRIVITY GENERAL DOCTRINE: “only a person who is a party to the contract can sue on it” (Dunlop Pneumatic Tyre v. Selfridge & Co) trend in the doctrine:  while the privity rule applies to third parties who are strangers, the privity rule with respect to third party beneficiaries is weakeningCanadian common law is now relatively unusual in maintaining the privity rule against third party beneficiaries   EXCEPTION significant signals in the case law especially from the Supreme Court of Canada that the privity rule with respect to third party beneficiaries this will continue to weaken Supreme Court of Canada’s generalized test in these cases seems to potentially open to many other situationse.g. in Fraser River Pile & Dredge Ltd v. Can-Dive Services Ltd.   TEST: where C is an employee of A or B (London Drugs Ltd v. Kuehne & Nagel International Ltd) a) did the parties to the contract intend to extend the benefit in question to the third party seeking to rely on the contractual provisionb) do the activities of the third party seeking to rely on the contract fall within the intended scope of the contractual provision

Terms?

GENERAL DOCTRINE Express terms: the express terms of the contract are those intended by the contractual parties (Heilbut, Symons & Co v Buckleton; Dick Bentley Productions Ltd v. Harold Smith Ltd.) TEST General Rules of Interpretation Plain Meaning/Ordinary Meaning: The primary interpretive principle is that where the language of the contract is unambiguous, effect should be given to the clear language; e.g. Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co.the meaning of a particular term in a contract should be understood in the context of the contract as a whole;when faced with seemingly inconsistent terms, contractual interpretation should try to reasonably give meaning to each of the terms included in the contract, rather than making terms redundant: principle of effectivenesswritten or typed provisions added to pre-printed standard forms, or handwritten provisions added to typed document, may be more reliable indications of party intentionsejusdem generis: “of the same kind” – the meaning of general words may be narrowed by the specific examples provided (e.g. “war, disturbance or any other cause”)Contra proferentem principle:  if there are ambiguities in a clause, it should be interpreted strictly against the party who drafted the document   IMPLIED TERMS GENERAL DOCTRINE commonly classified in three categories: (Machtinger v. HOJ Industries Ltd.; M.J.B. Enterprises Ltd. v. Defence Construction Ltd) (a) implied in fact Terms implied in fact are based on presumed intention of the parties where the implied term must be necessary “to give business efficacy to a contract or as otherwise meeting the “officious bystander” test as a term which the parties would say, if questioned, that they had obviously assumed” TEST obviousness requirement:  if parties were asked at time contract was made whether the term was included, each would agree that it was “obviously” included (M.J.B. Enterprises v. Defence Construction)   (b) implied by custom or usage •              based on custom of a particular location or usage of a particular trade •              custom or usage must be proved, and must be shown to be uniform, certain, well-known (notorious), and recognized as binding

BREACH GENERAL DOCTRINE: if a contractual term is not otherwise discharged, then a party may be in breach of contract. A breach of a contractual term may lead to a claim by the innocent party for contractual remedies, notably contractual damages based on the expectation or reliance measure.Certain breaches of contractual term may also lead to the option for the innocent party to elect to terminate the contract:  the innocent party can elect to terminate or to continue with the contract while seeking (if it chooses) contractual damages.if the innocent party terminates the contract, it can still seek any contractual damages that might be needed to put it in as good a position as if the contract had been performed.   Condition or warranty? to determine whether a breach leads to the option of termination for the party not in breach: A term may be classified in advance as a condition, the breach of which always leads to the option of terminationsome of the history of this language of “condition” is explained by Diplock LJ in Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd A term may be classified in advance as a warranty, the breach of which never leads to the option of termination   CASE SPECIFIC Hong Kong Fir, Many contractual term are not so classified in advance with respect to consequences of breach (sometimes referred to as intermediate or innominate terms) E.g. where the term with respect to “seaworthiness” was not classified in For intermediate terms, the availability of the option of termination will depend on the seriousness of the consequences of the breach.  TEST Does the breach deprive the party not in default of substantially the whole benefit which it was intended that she should obtain in the contract?  Hong Kong Fir Shipping Co. Ltd v. Kawasaki Kisen Kaisha Ltd. i) ratio of the party’s obligation not performed to the obligation as a whole e.g. in Hong Kong Fir: 17 of 24 months remained ii) likelihood of repetition of the breach e.g. in Hong Kong Fir: found that the repairs had been made and efficient and adequate staff provided iii) seriousness of the consequences of the breach to the innocent party iv) relationship of the part of the obligation performed to the whole obligation

Modification?

PRE-EXISTING DUTY    [1] GENERAL DOCTRINE A pre-existing duty owed to a promisor is not good consideration for a new contractual promise. (Stilk v. Myrick; Gilbert Steel Ltd. v. University Construction Ltd.) Traditionally, a party must do something more or other than it is already legally bound to do under its pre-existing duty to the promisor (Stilk v. Myrick; Gilbert Steel Ltd v. University Construction Ltd.)Important policy concern about improper pressure and potentially coercion: parties should not be allowed to threaten not to perform their contractual promises in order to generate additional benefits [2] EXCEPTION: The performance or promise to perform a pre-existing duty owed to a promisor that provides the promisor with practical benefits may be good consideration. (Williams v. Roffey Bros.; Greater Fredericton Airport Authority v. Nav Canada; Rosas v. Toca) TEST i) practical difficulties for the promisor (e.g. penalties on transactions with third parties) in event of breach by the promisee;ii) bona fide difficulties of the promise;iii) modification proposed by the promisor (also shows lack of duress) [3] Some courts may be willing to enforce contractual modifications even where there has been no consideration (Nav Canada v. Greater Fredericton Airport Authority; Rosas v. Toca) TEST: Where a promise to perform a pre-existing duty is claimed to constitute good consideration, courts will attend to issues of duress or unconscionability.  (Pao On v. Lau Yiu Long; Williams v. Roffey Bros.; Greater Fredericton Airport Authority v. Nav Canada.)     CASE SPECIFIC Public Duty: A promise to perform or actual performance of a public duty is not good consideration, unless something extra is done or promised beyond the requirements of the public duty. (Ward v. Byham)   Third Party: The performance or promise to perform a duty owed to a third party may be good consideration. (Shadwell v. Shadwell; Pao On v. Lau Yiu Long) the promise to perform to a new party adds a direct obligation of the promisor to the new party (who can now sue directly), and reinforces its obligation to the third party (Pao On v. Lau Yiu Long) PARTIAL PERFORMANCE GENERAL DOCTRINE Part performance, or the promise thereof, does not generally constitute good consideration for a promise to discharge a party of its legal obligations. (Foakes v. Beer) Traditionally, there is the need for new consideration such as through an accord and satisfaction, i.e. the replacement of the old agreement with a new agreement (accord) supported by consideration moving from each side (satisfaction).  (Foakes v. Beer; Foot v. Rawlings)Where promises of both parties remain at least partially unperformed, the agreement to rescind the original contract may be enforceable through the mutual exchange of promises to release the other party from its remaining legal obligations. PROMISSORY ESTOPPEL GENERAL DOCTRINE Where a party makes a clear and unequivocal promise or representation that it will not insist on its strict legal rights and the other party alters its position in reliance, the first party may be estopped from asserting its strict legal rights. (Central London Property Trust Ltd. v. High Tree House Ltd.)   TEST 1) PROMISE: There must be a clear and unequivocal representation or promise by the party indicating that the promisor intended the promise to be taken seriously and to alter the legal relations created by the contract.  (John Burrows Ltd v. Subsurface Surveys Ltd.; Societe Italo-Belge S.A. v. Palm and Vegetable Oils.) 2) RELIANCE: The promisee must have altered its position in reliance on the promise such that it would be inequitable for the promisor to go back on its promise (i.e. prejudicial to revert back).  (Societe Italo-Belge S.A. v. Palm and Vegetable Oils; W.J. Alan & Co. v. El Nasr Export & Import Co.) 3) NOTICE: A promisor can resile from its promise by giving reasonable notice to the promisee that provides the promisee with a reasonable opportunity to resume its position. (Central London Property Trust v. High Trees House Ltd.; Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co.) 4) EQUITY: Promissory estoppel is based in equity, and so the court retains discretion to refuse the doctrine if inequity would result. A claim based on promissory estoppel may be denied where there is found to be inequitable conduct by the promisee, such as improper pressure or misrepresentation. (D. & C. Builders Ltd. v. Rees.)   CASE SPECIFIC A claim of promissory estoppel cannot itself provide the basis for a cause of action in contract.  (Combe v. Combe; M.(N.) v. A. (A.T.).) EXCEPTION: This defense is most commonly used by defendants, but may be used by plaintiff who wishes to rebut allegations of contractual breach made by D. BUT it is essential in either case that the contractual variation constitutes a concession rather than an affirmative undertaking to provide additional benefits under the agreement,

Remedies?

EXCLUSION/LIMITATION CLAUSE GENERAL DOCTRINE: a contractual term that excludes or limits all or some of the legal liability of a party (Thornton v. Shoe Lane Parking)   TEST 1)Notice Requirements: Unsigned Writings (Thornton v. Shoe Lane Parking Ltd.) Depends on knowledge of the party – bound by clause if knowledge of the writing, but not of the specific condition Reasonable notice test: whether a clause is binding or not depends on whether there was reasonable notice of the existence of the clause  -factors:notice must be given at the same time as formation of the contractform or manner of notice: number of factorscourts reluctant to find notice if terms are contained in non-contractual documents; Thornton v. Shoe Lane Parking Ltd.may depend on business practices and normal understandings of the kind of transactionknowledge of the parties: e.g. a business buyer versus a consumer engaged in a transaction unusual to her or him Signed Writings (Tilden Rent-a-Car Co. v. Clendenning) Contemporary view: where a party who seeks to rely on terms in a standard form of a contract knows or had reason to know that the signature does not represent the intention of the other party with respect to those terms, then it must take reasonable measures to draw such terms to the attention of the party signing: Tilden Rent-A-Car Co. v. Clendenning parallel drawn to misrepresentation and to unilateral mistake as to terms where the other party knows that the mistake is being made   2) Strict construction (test of intent) is another way for courts to control the effect of exclusion clauses. – contra proferentem principle: where a contract is drafted by one of the parties, ambiguities are likely to be construed against that party (Scott v. Wawanesa Mutual Insurance; Tercon Contractors Ltd. v. British Columbia) – in general, very clear words required to limit liability for negligence (Canada Steamship Lines Ltd v. R.) – potentially less restrictive approach in contracts between commercial parties (Miida Electronics Inc. v Mitsui O.S.K. Lines Ltd.)   3) (Fundamental Breach or Unconscionability) Tercon Contractors Ltd. v. British Columbia (2010) TEST As a matter of contractual interpretation, does the exclusion clause apply to the circumstances established in the evidence? (Like strict construction: is there ambiguity?) If the exclusion clause applies, was the exclusion clause unconscionable at the time the contract was made?Even if it was not unconscionable, should the exclusion clause not be enforced because of the existence of an overriding public policy that outweighs the public interest in enforcement of contracts? (e.g. poisoning babies)

REMEDIES GENERAL DOCTRINE Expectation damages are the normal measure for money damages in contract law; an expectation damage award should put the plaintiff in as good a position as that it would have been in if the contract had been performed (Sally Wertheim v. Chicoutimi Pulp Co.; Keneric Tractor Sales Ltd. v. Langille; Hawkins v. Magee)   TEST EXCEPTION specific performance in limited cases where money damages are inadequate (Warner Bros v Nelson)   CASE SPECIFIC Reliance damages are an alternative measure of damages for breach of contract. (McRae v. Commonwealth Disposals Comm.) A reliance damage award seeks to put the plaintiff in as good a position as that it was in before the contract was made direct loss: such as wasted expenses or injury caused; includes restitution; but also any out-of-pocket or wasted expenses; can include pre-contractual expenditures so long as they are wasted in reliance on the contractloss of opportunities: plaintiff must be able to prove the loss)limits on recovery: must be wasted: not have continued value; no double recoveryCircumstance: difficult for plaintiff to prove expectation damages; reliance is substantially all the plaintiff’s loss   Restitution damage award seeks to restore to the plaintiff the value of any unjust enrichment it has provided to the defendant.  (Deglman v. Guaranty Trust Co.) may be used to provide an alternative remedy for breach of contract. Requires unjust enrichment: (a) detrimental reliance by the plaintiff (b) resulting benefit to the defendant (c) enrichment is unjust: benefit is not justified under lawThis more limited form of “remedy” is also used in two other situations we have already mentioned: (a) where a contract is voided or rescinded for a general contractual defect such as duress, unconscionability or operative misrepresentation, restitution between the two contractual parties, if possible, might also be ordered (b) [where an innocent party has terminated a contract for breach, the other party sometimes may receive restitution for value that it has provided to the innocent partycircumstance: (a) where difficult to prove expectation or reliance damages (b) where restitution covers substantially the whole of the plaintiff’s loss

MEASURING DAMAGES GENERAL DOCTRINE In situations where damages are uncertain, an estimate for the loss of a chance may be possible based on evidence of (a) the magnitude of potential gains, and (b) the probability of such gains (Chaplin v. Hicks)   TEST One measure = Direct losses + consequential losses (and incidental losses) – avoided costs/losses   EXCEPTION Subject to important limits or boundaries on recovery (limits for remoteness, uncertainty, intangible loss, punitive damages)   CASE SPECIFIC Quantification: Cost of Completion versus Difference in Value   Where there is a disparity in measures of damages for breach between, in situations such as work done to property, quantification based on cost of completion versus quantification based on difference in value of an underlying asset, the innocent party is generally entitled to receive the cost of completion.  (Nu-West Homes Ltd. v. Thunderbird Petroleums Ltd.; Groves v. John Wunder Co.)However, the plaintiff may be limited to loss in value based on factors such aswhether the cost of completion is grossly disproportionate to the difference in value; (Peevyhouse v. Garland Coal Mining Co.)where completion is not of any particular value to the innocent party; -contrast with the “ugly monumental fountain” referred to in (Groves v. John Wunder Co.)evidence that the innocent party does not intend to cure the defect;whether the innocent party has acted unreasonably in addressing the defect. (Nu-West Homes Ltd. v. Thunderbird Petroleums Ltd.)The courts should not too finely judge the conduct of the innocent party: the party in breach is entitled to expect the innocent party to act reasonably, not perfectly. (Nu-West Homes Ltd. v. Thunderbird Petroleums Ltd.)     CASE SPECIFIC Punitive Damages Doctrine: (Whiten v. Pilot Insurance Co.) Punitive damages are permitted in contract law, but are exceptional.The conduct of the defendant is malicious, oppressive and high-handed conduct that is a marked departure from decent behavior.  [Para 36, 94]Punitive damages in contract require conduct that amounts to an independent actionable wrong, something beyond a simple breach of a contractual term. [Para 78]Although there is no fixed formula, punitive damages should be proportionate to such factors as:the harm caused; degree of misconduct; relative vulnerability of the plaintiff; any advantage or profit gained by the defendant; the need for deterrence in light of other civil and criminal penalties.  Appellate courts will exercise a broader discretion to review trial level awards of punitive damages, in particular with respect tothe rationality of award to goals of retribution, deterrence and denunciation; andproportionality with respect to quantum     CASE SPECIFIC Liquidated Damages and Penalty Clauses Courts will enforce liquidated damages clauses, but will not enforce penalty clauses.  (Shatilla v. Feinstein)Test: is the liquidated damages clause a genuine pre-estimate at the time of the formation of the contract of the potential damage of breachFactors: (Shatilla v. Feinstein)language and labels are important but are not determinativeare damages otherwise difficult to calculatewhere single breach: is sum fixed in excess of any actual damage which can possibly arise from the breach of contractwhere potential multiple breaches: (i) if losses similar regardless of breach, then compare to the estimate in the liquidated damages clause (ii) if loss varies according to particular breach and yet a single measure is used, then may be a penalty unless can show that parties had considered this potential range of losses and decided on this measure.  Case specific assessment, including: Super Save Disposal Ltd. v. Blazin Auto Ltd.; relationship between the parties: e.g. whether commercial parties of equal sophistication and bargaining powertype of contractlength of contract as well as length of term remaining when breachBecause the refusal to enforce liquidated damages clauses is a clear interference with an agreement reached through the freedom of contract of the parties, courts will usually enforce them, unless there is evidence of oppression or unconscionability.  (J.G. Collins Insurance Agencies Ltd. v. Elsley; Super Save Disposal Ltd. v. Blazin Auto Ltd.)         LIMITS ON RECOVERY   TEST Causation: The breach must have been the factual (but-for) cause of the loss for which damages are claimed by an innocent party.   Time of Measurement of Damages: Contractual damages are normally assessed as of the date of breach, unless circumstances exist that mean that the plaintiff has some substantial or legitimate interest in waiting for a later date. (Semelhago v. Paramadevan) Where damages are awarded in lieu of specific performance, the assessment may occur at the date of the trial.  (Semelhago v. Paramadevan) However, a claim to specific performance will not remove the obligation to mitigate unless there is some fair, real and substantial justification for the claim to specific performance. (Asamera Oil; Semelhago v. Paramadevan)   TEST Remoteness (1) The doctrine of remoteness is a limitation on the recovery of contractual damages for losses, particularly of consequential losses, even when they are factually caused by the breach: (Victoria Laundry (Windsor) Ltd. v. Newman Indust. Ltd.) (2)  The rules from Hadley v. Baxendale:  a)  First Rule.  An innocent party can recover those damages that flow from breach in the usual or ordinary course of things b) Second Rule:  An innocent party can recover damages liable to result from special circumstances if the party in breach had sufficient knowledge of those circumstances.  (3) Synthesis: Damages are recoverable for such losses as were at the time of the contract reasonably foreseeable as liable to result from breach of the contract. (Victoria Laundry Ltd. v. Newman Indust. Ltd.; Scyrup v. Economy Tractor Parts Ltd.) (4) The relevant time:  what was reasonably foreseeable at the time of the making of the contract as liable to result from the breach. (Victoria Laundry Ltd. v. Newman Indust. Ltd.) (5) Remoteness concerns the foreseeability of the consequences of the breach, not whether the breach itself was reasonably foreseeable; (RBC Dominion Securities Inc. v. Merrill Lynch Canada Inc.) (6) It is generally sufficient for the defendant to foresee the type or kind of damage, even if it did not foresee the exact extent or quantum of damage. (7) Factors in the application of the remoteness rules: the quality and specificity of the actual knowledge of the party: (Victoria Laundry Ltd v. Newman Indust. Ltd.; Scyrup v. Economy Tractor Parts Ltd.; Cornwall Gravel v. Purolator Courier)the identities of the parties and their relationshipthe type of contract: the proportionality of the claimed loss to the anticipated benefits to the parties under the contract   TEST Mitigation Expectation damages for breach of contract may be limited by the principle of mitigation.  (Payzu Limited v. Saunders; Asamera Oil Corp. v. Sea Oil & General Corp.)To mitigate, the party who has suffered from a breach must take reasonable steps to limit avoidable damages resulting from the breach. (Payzu Limited v. Saunders; Asamera Oil Corp v. Sea Oil & General Corp)Mitigation may require that the innocent party continue the contractual relationship with party in breach. (Payzu v. Saunders; Evans v. Teamsters Local Union No.31)The defendant has the burden to prove that the plaintiff could reasonably have avoided some part of the loss claimed.A plaintiff is reimbursed for additional expenses that can reasonably be said to be incidental to steps to mitigate damages flowing from the breach.  (Asamera Oil) e.g. brokerage and commissions fees on purchase/sale of shares the plaintiff is not required to take all possible steps, only reasonable steps to mitigateNormally, mitigation should occur at the time of breach, but if not, then within a time that is “reasonable in all the circumstances”Mitigation may also require an innocent party to litigate promptly. (Asamera Oil)The desire for specific performance might justify not taking steps to mitigate, but only if there is some fair, real and substantial justification for the claim to specific performance.  (Asamera Oil)   TEST Mental Distress and Other Intangible Interests Traditionally, contract law was reluctant to permit recovery for loss of enjoyment or intangible injury.Modern courts do provide damages for harm to intangible interests caused by a breach in contracts that have intangible interests as their primary, major or important purpose.  Jarvis v. Swan Tours; Fidler v. Sun Life Assurance Co. of Canada. Even where intangibles are not the primary purpose of the contract, damages for intangible harms caused by breach of contract may also be recoverable where (a) such harms were within the reasonable contemplation of the parties, and (b) the harm was of a degree sufficient to warrant compensation. Fidler v. Sun Life Assurance Co. of Canada. Recovery for intangible injuries in breach of contract are limited by the general rules for mitigation and for remoteness.  Fidler v. Sun Life Assurance Co. of Canada.The plaintiff must prove its losses, but the courts can estimate the harm based on factors such as the contract price, costs of remedying the harm (such as medical bills), and the degree of mental suffering.  Jarvis v. Swan Tours; Fidler v. Sun Life Assurance Co. of Canada.